[Originally published in the Vanuatu Daily Post’s Weekender Edition.]
“Living next to you is in some ways like sleeping with an elephant. No matter how friendly and even-tempered is the beast, if I can call it that, one is affected by every twitch and grunt.”
Canadian Prime Minister Pierre Trudeau offered this wry description of relations between Canada and the US at the Washington Press Club back in 1969. Had he been a ni-Vanuatu politician addressing the press in Canberra, he might have used an aquatic simile, but the message would have been the same.
In recent years, Vanuatu has been learning to manoeuvre in this demanding and rather tricky role. To further complicate things, there is more than one elephant in this particular bed. Between the EU, the WTO, China and our other regional neighbours, trade and aid negotiators in Vanuatu have had their hands full.
Happily, 3000 years of practice in patient negotiation and peace-making have so far paid off. To mix metaphors, Vanuatu has of late consistently punched well above its weight when it comes to negotiating this sometimes parlous state of affairs.
But our work isn’t finished yet, and if anything, the stakes are higher now than they’ve been in years. Time is not on our side and the elephants are encroaching once again.
Much has been made recently of Vanuatu’s renewed negotiations toward accession to the World Trade Organisation, or WTO. It reached the brink of an agreement in 2001, but wisely backed away when it became clear that trade conditions would be imposed on it that were far worse than those of major developed nations.
Some developed nations saw the action as a sign of outright temerity and presumption, but Vanuatu stuck to its guns, and this latest round of negotiations could see Vanuatu losing very little ground as the price of accession. ‘Could’, of course, is a pretty big word in this context.
The Pacific Institute of Public Policy (PiPP) this week released a briefing paper on trade negotiations throughout the Pacific region. It notes that, “The WTO General Council has since agreed to provide more flexibility on the accession of [Least Developed Countries, of which Vanuatu is one]. It remains to be seen if Samoa and Vanuatu (set to re-start accession discussions in 2008) will benefit from this special treatment.”
The report goes on to describe Tonga’s experience. In spite of its LDC status, it was required to drop many subsidies and to keep tariff rates to an average 20%, very low by Pacific standards.
Tariffs are one of the main sources of revenue for the Government of Vanuatu. Negotiating them away, no matter what the potential benefits, is not a step to be taken lightly.
Worse, we don’t have a lot of time to deliberate. Vanuatu looks set to graduate from its LDC status by 2013. If and when that happens, we’ll lose a lot of moral traction.
The EU recently flexed its muscle in the region, requiring Fiji and PNG to sign up to its rather punitive Economic Partnership Agreements in order to maintain access to European markets for their tuna and sugar exporters. Vanuatu and other countries didn’t have as much to lose from this threat, because they export very little to European countries. As a result, they were able to slip aside before the elephant rolled over on them.
Life with our pachyderm bed-mates may require a little nimbleness and tact, but a trade agreement is like getting married to one. When it comes time to consummate the affair, you really, really want to make sure that the mouse is the groom, not the bride.
The prospects for future happiness may not seem terribly rosy, but there’s a limit to what Vanuatu can achieve. Whether we like it or not, the status quo is simply not an option. We can play off one elephant against another, we can play for time, we can even use a little guile and diplomacy, but in the end, we’ve got to move.
We also have trade negotiations in the offing with Australia and New Zealand, who want free trade conditions throughout the region. The upcoming PACER+ negotiations are arguably our most pressing challenge, and according to PiPP, the most controversial. The potential exists for free trade conditions to be imposed throughout the region, with the result that government revenues for some Pacific Island nations could decrease by as much as 30%. Such a drop in revenues would be one step shy of disastrous for Vanuatu.
The most likely outcome from such a scenario would be increased dependence on foreign aid. And given the circumstances, it’s one wonders how Vanuatu would feel about approaching either of its nearest donor neighbours hat in hand. That would leave the EU, hardly more attractive, or China, whose history of hands-off, no-questions-asked support might lead to backsliding in transparency and consultation in development processes.
Vanuatu and its Pacific Island neighbours are huddled together on a rather small bed with some very large would-be paramours. The years ahead will require every ounce of tact and nimbleness we can muster.